1983 300D 132kmiles

The car has a clunking sound when you move the selector lever from drive to reverse with foot on brake. Also clunks when you apply power and release it when running at a constant speed.

With this mileage I would think it would be front flex disk. However, both flex disks and the center support bearing look good. I jacked up one rear wheel and I get about 3.5 inches of travel at the circumference of the tire. This translates to about 16 degrees of free travel. My 1980 240 has about 0.75 inch of travel measured at the same point.

By watching the drive shaft and the axles when I move the wheel, it looks like about 80% of the travel is in the differential.

Everything looks like the differential is worn, but the mileage (which is correct) doesn't seem correct for this type of wear. Any ideas?

thanks
Joe